business news in context, analysis with attitude

Interesting column the other day by Paul Krugman in the New York Times, in which he wrote that “there has been fierce competition among states hoping to attract a new Toyota assembly plant. Several Southern states reportedly offered financial incentives worth hundreds of millions of dollars.

“But last month Toyota decided to put the new plant, which will produce RAV4 mini-S.U.V.'s, in Ontario. Explaining why it passed up financial incentives to choose a U.S. location, the company cited the quality of Ontario's work force.”

One of the problems in the US, according to some reports, was that the educational level in Canada was better than in the US – the auto workers there are better trained, and therefore require less training in order to get them to use high-tech equipment.
KC's View:
The irony, it seems to us, is that during a time when US auto companies have been trumpeting their “employee pricing,” Toyota actually raised its prices.

Toyota’s message seemed to be, “let everybody else turn their vehicles into lowest common denominator commodities. We’re going to produce quality, and charge for it.”

The US car companies also may suffer from their disingenuous advertising – they kept saying that they had “employee pricing” because they wanted to share the benefit with consumers, but everybody knew that they had it because GM could sell any cars, instituted the policy, and the other US car companies followed like lemmings. And maybe, just maybe, sent the wrong message about the quality of their cars.

(We also wonder, quite frankly, how you end “employee pricing” and move to another promotional program that almost certainly will be higher; won’t people feel like they’re paying too much?)

There seem to be parallels here in how too many retailers follow the low-price leaders because they feel they have to, as opposed to defining themselves, their products and their customers another way.